Role of the Cloud in Enterprises
The horizon certainly looks cloudy - these solutions are here to stay. Cloud computing has headlined Gartner’s list of top trends for the past two years. They labeled 2009 as the “year of discovery”, 2010 the “year of experiment”, and predict the next three years to be those of “expansion”, with expectations for this trend to peak in 2014.
I completely agree that cloud solutions will continue on a growth curve over the next few years, as companies get more serious about on demand solutions. These solutions are increasingly being factored into IT and line of business budgets and agendas. So, why is cloud so popular, and what does it mean to an enterprise? Cloud services offer some universal benefits, and a host of opportunities to companies, departments and individuals.
Companies turn to on demand solutions for these much touted, universally enjoyed features:
- Affordability and predictability,
- Consumption-ready solutions, designed to fit their unique needs, that are easy to purchase, deploy and use,
- A terrific user experience in all facets of exploring, evaluating, purchasing, tailoring and using the solution,
- Continuous availability, and extremely responsive service.
In my opinion and talking to customers, on demand solutions offer distinct benefits and uses to enterprises based on their size, some highlighted here:
- For Large Enterprises, with sophisticated software & mature IT infrastructure, cloud computing provides significant opportunities to reduce improve IT operations and efficiency.
- For Lines of Business, cloud and on demand solutions provide new ways to streamline or improve processes, and leads to enhanced collaboration, improved decision making and faster business outcomes.
- For Small and Midsize Businesses, with limited IT infrastructure and resources, on demand solutions provide the opportunity to access sophisticated business management software without the cost, risk and complexity traditionally associated with enterprise software. SMEs also benefit from their scalability, and need systems that can grow with them.
- For IT Solution and Service Providers, this growing field opens up new opportunities for greater innovation and participation across the IT industry.
Trends and developments that I expect to see over the next couple of years:
- Cloud and large enterprises:
According to a Gartner study, 70% of companies with over 1,000 employees have not yet adopted cloud solutions. In my observation, even though larger companies that have not yet taken the cloud leap (for reasons such as security, compliance, quality and cost – including switching costs) they are seriously evaluating their options. Many of them are already using cloud solutions for certain functions or lines of business. Larger companies will continue to keep the existing infrastructure intact, but will adopt cloud solutions from the edge. Cloud will infiltrate gradually, and will complement their existing systems.
Enterprises will end up a ‘hybrid landscape’ involving some permutation of customized private clouds running inside a company, pre-packaged clouds from vendors, exclusive clouds, public clouds, a cloud based ecosystem and everything in between. I think the big challenge will be to manage these diverse infrastructures, while running an end-to-end business process. Enterprises and IT departments will need to orchestrate a host of services which include custom private, packaged private, exclusive clouds, community clouds, public clouds. They will need to chart out an overall strategy that goes beyond loosely linking together a host of web services. Our customers are going to require a framework, enterprise service oriented architecture, business process engineering and best practices. SAP offers expertise and a long heritage of dealing with such challenges.
- Need for Content Rich Platforms:
Enterprises are going to demand broader platforms that contain business content as well as context, and can be orchestrated as well as linked to a larger system. Solution providers will need to create outstanding application portfolios. To start from “empty” platforms without business context is burdensome, to use platforms caged in a distinct area of expertise – even more so.
The value to and from a cloud ecosystem lies in ‘delivery as a service’. Consider the ecosystem as customers using your platform, infrastructure and software on an ‘as needed’ basis. The ecosystem will seek all solutions that deliver value to them and to their customers, and this will involve not necessarily involve a single vendor ‘stack’. Providers will need to combine and layer infrastructures such as private and public clouds to serve distinct customer needs.
IT departments are going to be charged with managing the cloud landscape, will need to provide governance and support. IT will also need to be more strategic in their role and evaluation criteria, and will need to consider not just the cost of the solution, but the overall, long term value proposition. Will blog on my observations here more in detail next time.
Exciting times lie ahead for all of us involved in the world of cloud. There are many ‘silver linings’ to embrace, and some challenges to consider. We are going to see this technology dominate the next few years, and every company, regardless of size, will need to figure out their cloud strategy.
It is encouraging in our co-innovation work to see how fast and serious our customers embrace that topic, though looking for clear guidance and proof points where to start.
